Futures File: Ian storms commodity markets | Business
Hurricane Ian, identified as the sixth most powerful hurricane in United States history — and one of the worst to hit Florida — stimulated rapid intermittent buying of crude oil, diesel, gasoline, natural gas, orange juice and lumber all week.
After a brief hiatus, as the category 4 storm moved into the Atlantic and lost energy, the eye was aiming at the Carolinas for a somewhat milder category 1 dose of flooding and damage. Crude, heating oil and gasoline spiked upward midweek, but weakened on Friday as damage to rigs and refineries were assessed.
Frozen orange juice continued higher throughout the week. By late Friday, December crude was $79 per barrel, down roughly $3.50 from last Friday. December gasoline was $2.28 per gallon, down about 7 cents from last Friday. December diesel fuel traded at $3.13.
Wheat — the grain most impacted by the war in Ukraine — staged a huge rally, accelerating all week. That rally was also fueled by a bullish United States Department of Agriculture report, indicating lower wheat stocks than had been expected. December wheat closed at $9.23 per bushel, whereas December corn was only up a shade at $6.78. November beans were actually down almost 80 cents on the week at $13.66.
European Nations Claim Sabotage of Gas Line
The NATO Alliance warned that Russia was responsible for damage and multiple leaks from natural gas pipelines in the Baltic Sea. The pipelines run underwater from Russia to Germany and, while not being used when the damage occurred, provided a potential route for Europe to receive Russian gas this winter.
The hope that will occur is now abandoned. U.S. natural gas prices showed little reaction with November gas trading at $6.79 per 10,000 MMBtus.
Answers to Last Week’s Quiz
Commodities are physical natural resources that have been traded since 1852 in the form of futures contracts. It has been a highly efficient system providing advantages, liquidity, and uniformity for producers (such as farmers), end users, and investors.
Both agricultural and industrial commodities are now traded throughout the world with Chicago remaining a major center. These are the most basic resources at the foundation of our economy and entire civilization. The futures contract system was adapted by the financial industry during the last 25 years as an efficient way to trade currencies. Stock indexes followed suit and, most recently, Bitcoin and other financial instruments have as well.
Futures trading now includes both actual commodities, like grains and metals, and financial markets such as stock indexes, Bitcoin and treasury bonds traded in the form of futures contracts.
Walt Breitinger is a commodity futures broker in Valparaiso, Ind. He can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.
